Dendreon Corporation (DNDN)
Q2 2012 Earnings Conference Call
July 30, 2012, 16:30 p.m. ET
Nicole Soley - IR
John Johnson - Chairman and CEO
Joe DePinto - EVP, Global Commercial Operations
Greg Schiffman - EVP and CFO
Mark Frohlich - EVP, Research and Development and CMO
Mark Schoenebaum - ISI Group
Karen Jay - J.P. Morgan
Rachel McMinn - Bank of America/Merrill Lynch
Salveen Richter - Canaccord Genuity Securities
Eric Schmidt - Cowen and Company
Lee Kalowski - Credit Suisse
David Miller - Biotech Stock Research
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Good afternoon, ladies and gentlemen, and welcome to the Second Quarter 2012 Dendreon Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions on how to participate will be given at that time. (Operator Instructions) As a reminder, today’s conference is being recorded.
Now, I’d like to turn the conference over to your host, Nicole Soley.
Thank you, and good afternoon, everyone. We’re pleased that you could join us today for our second quarter conference call. With me are John Johnson, Chairman and Chief Executive Officer; Joe DePinto, Executive Vice President of Global Commercial Operations; Greg Schiffman, Executive Vice President and Chief Financial Officer; and Mark Frohlich, Executive Vice President of Research and Development and Chief Medical Officer.
Before we begin, I’d like to remind you that during this call, we will be making forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ from the results discussed in the forward-looking statements. Reference to these risks and uncertainties is made in today’s press release and they are disclosed in detail in our periodic and current event filings with the U.S. Securities and Exchange Commission.
Now, with that, I will turn the call over to John.
Thank you, Nicole. And thank you all for joining us to discuss our second quarter results and the strategic restructuring, which we announced earlier today.
I’d like to begin by reviewing this afternoon’s announcement and provide some perspective on where Dendreon is today and where we are headed into the future, then I will turn the call over to Joe and Greg who will discuss our results in greater detail.
Today is a first call I’ve held since becoming Chairman of Dendreon. Since becoming CEO in February, I’ve spent a significant amount of time with customer’s, visiting at each of our sites across the country and taken a deep dive in the all aspects of our organization from our manufacturing and technical operations to our commercial operations.
Being pioneers of immunotherapy has come with a sheer challenges, making the transition from a research and developed focused organization to a commercial organization, as proved especially challenging for Dendreon with four different individuals having commercial reporting to them over the last two years. During this time we have pioneered new ground in manufacturing and delivering PROVENGE and have learnt a tremendous amount about how to do that efficiently.
In building for the unknown and making that transition rapidly, our thought base grew rapidly and how needs to be brought in line with a company of our size, taking into account of course all the learning’s that we have experienced.
All my confidence in many things Dendreon does well has been reconfirmed. Nevertheless, there are significant opportunities for further improvement and ways to accelerate our path to growth and profitability.
So, what have I learned? First, a meeting with customers’ there are still strong support for PROVENGE becoming the foundation of care and I believe today there are significant growth that can be seen in the future. This was evidenced by the number of new sight and accounts we setup in the second quarter.
Let me be very clear, I’m not satisfied with the commercial performance of PROVENGE and believe more men with advanced prostate cancer should be benefiting from the product. We recognized that we have to rebuild our commercial organization to become more flat and begin with the hiring of Joe in March and has continued through the second quarter. We are not backing down our commitment to PROVENGE, in fact our investment in growing the product will remain constant and we will continue to invest in generating PROVENGE clinical data at the current rate. We will increase our focus on customer service, and this is in line with the top priority that I outlined in our Q1 call.
Second, I learned that we have made important strides in how to manufacture and deliver PROVENGE. Looking at the cost of goods they would be very easy and very wrong to apply conventional wisdom in making decisions about how to lower these costs. After careful analysis we have determined that we can deliver up to $1 billion of PROVENGE from our two manufacturing facilities in Georgia and California without impacting quality or customer service, thereby lowering our cost of goods which was in line with our second priority that I outlined. Since launch we have earned a great deal about the strives in automation that could help us at least double the output of PROVENGE in these two facilities to help us meet any growing demand as well as continuing to lower cost of goods.
Third, I learned that while a company grew it's employee base and invested heavily to build systems and prepare for commercialization, there are opportunities to become more efficient and cut cost from a D&A standpoint to come more into line with benchmark companies.